IM Cannabis (IMCC) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue grew 12% year-over-year to CAD 14.8 million, driven by a 129% surge in German sales following legalization, now comprising 24% of total revenue.

• The company canceled a planned reverse merger to prioritize growth in Germany, leveraging its position as the sixth-largest distributor.

• Operating expenses decreased 29% year-over-year to CAD 3.7 million due to restructuring and cost controls.

• Operational focus in Israel shifted to premium and ultra-premium segments, with inventory clearance and cost management to support profitability.

• Net loss narrowed slightly to CAD 3.5 million from CAD 3.7 million in Q2 2023.

Financial highlights

• Q2 2024 revenue was CAD 14.8 million, up 11.7% year-over-year, driven by 129% growth in Germany.

• Gross profit fell to CAD 0.8 million from CAD 3.5 million year-over-year, mainly due to inventory clearance and accruals for slow-moving stock.

• Gross margin after fair value adjustment was 6%, down from 26% in Q2 2023.

• Adjusted EBITDA loss was CAD 2.3 million, compared to a loss of CAD 0.5 million in Q2 2023.

• Cash and cash equivalents stood at CAD 0.7 million as of June 30, 2024, down from CAD 1.8 million at year-end 2023.

Outlook and guidance

• The company expects continued accelerated growth in Germany, supported by increased supply channels, including new imports from Israel.

• Management anticipates healthy gross margins in Germany (around 40%) but is preparing for potential price compression as the market matures.

• Israeli operations will focus on premium products and cost control to improve margins over the coming quarters.

• Company remains focused on Israel and Germany as core markets, having exited Canada.